Russian President Vladimir Putin

MOSCOW, December 4. /TASS/. Russia’s moratorium on tax hikes and western sanctions that provoked a cautious attitude to money from Russia will facilitate offshore capital amnesty announced by President Vladimir Putin, experts said on Thursday.

In his state of the nation address on Thursday, Putin announced an all-out amnesty for offshore capital to return Russian capital from foreign jurisdictions.

This process, however, may be impeded by distrust for Russian courts, entrepreneurs said.

Capital amnesty can be implemented in two formats. One option is tax amnesty when an owner of ‘grey money” pledges to return capital and pay taxes on it and is relieved of penalties and criminal liability. This scheme was used in Russia in 2007 but without a success.

The second option is full amnesty with the legalization of funds that were not taxed and were possibly used in breach of other laws. Traditionally, these funds hide in offshore jurisdictions.

“Now the state of the Russian economy, its stock and foreign exchange markets is not conducive to large-scale investments because risks are high,” Uralsib Capital expert Alexei Devyatov said, adding, however, this issue was more essential for investors with legal funds.

“Many people who earned money by not quite legal means would want to legalize it,” he said.